The Proof-of-Stake (PoS) consensus algorithm has been criticized, in the literature and in several cryptocurrencies communities, due to the so-called compounding effect: who is richer has more tokens to put in stake, hence higher probability of being selected as a block validator and obtain the corresponding rewards, thus becoming even richer. In this paper we present a PoS simulator written in the R language, that allows to tweak several parameters of the consensus algorithm and observe how the distribution of tokens among the users evolves over time. This tool can be used to investigate which combinations of parameter values allow to obtain a "fair" consensus algorithm, in which no one gets richer or poorer by the mere act of validating blocks.

Leporati, A. (2023). Studying the Compounding Effect: The Role of Proof-of-Stake Parameters onWealth Distribution. In Distributed Ledger Technology Workshop Proceedings of the Fifth Distributed Ledger Technology Workshop (DLT 2023) (pp.1-14). CEUR-WS.

Studying the Compounding Effect: The Role of Proof-of-Stake Parameters onWealth Distribution

Leporati A.
2023

Abstract

The Proof-of-Stake (PoS) consensus algorithm has been criticized, in the literature and in several cryptocurrencies communities, due to the so-called compounding effect: who is richer has more tokens to put in stake, hence higher probability of being selected as a block validator and obtain the corresponding rewards, thus becoming even richer. In this paper we present a PoS simulator written in the R language, that allows to tweak several parameters of the consensus algorithm and observe how the distribution of tokens among the users evolves over time. This tool can be used to investigate which combinations of parameter values allow to obtain a "fair" consensus algorithm, in which no one gets richer or poorer by the mere act of validating blocks.
paper
Blockchain; Compounding effect; Proof-of-Stake; Tokenomics; Wealth distribution
English
5th Distributed Ledger Technology Workshop, DLT 2023 - May 25-26, 2023
2023
Mori, P; Visconti, I; Bistarelli, S
Distributed Ledger Technology Workshop Proceedings of the Fifth Distributed Ledger Technology Workshop (DLT 2023)
2023
3460
1
14
2
https://ceur-ws.org/Vol-3460/
open
Leporati, A. (2023). Studying the Compounding Effect: The Role of Proof-of-Stake Parameters onWealth Distribution. In Distributed Ledger Technology Workshop Proceedings of the Fifth Distributed Ledger Technology Workshop (DLT 2023) (pp.1-14). CEUR-WS.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/449079
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